05 March 2014

Law in Plain English: Lawson v. FMR LLC

This is one in a series of posts designed to describe court decisions in plain English. For more detail and background on the legal issues, see the link to the case below. For similar posts, click here.

SCOTUSblogLawson v. FMR LLC

Argument: Nov 12 2013 (Aud.)

Background: Sarbanes-Oxley (SOX) has a whistleblower protection provision for employees of public companies. Lawson and Zang were employees of FMR LLC (and their subsidiaries), private companies working as an advisor or subcontractor to Fidelity, a public company organized under the Investment Company Act of 1940 and subject to reporting requirements of the Securities and Exchange Commission. Both alleged concerns about internal practices (Lawson resigned, alleging constructive discharge; and Zang was fired). The private companies filed a motion to dismiss, arguing that they were not covered under the whistleblower provision because they were not public companies. However, the District Court agreed with Lawson and Zang and found that SOX whistleblower protection provision extended to employees of private agents, contractors, and subcontractors to public companies. The First Circuit reversed, finding that the District Court's definition was too broad.

Issue: The question before the Court is whether an employee of a privately held contractor or subcontractor of a public company is protected from retaliation by the SOX whistleblower protection provision.

Holding: In a 6-3 decision, the Supreme Court ruled that SOX's whistleblower protection provision includes employees of a public company’s private contractors and subcontractors.
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